Push to export US coal to China: "Motivated by a desperate industry, not sound economics"

Washington DC - February 27, 2013 - The Chinese market for US coal exports may dry up before major new US coal shipments ever reach its ports, according to a new Greenpeace report. The report, "The Myth of China's Endless Coal Demand: A missing market for US Exports" identifies several factors that cast doubt on the future of Chinese demand for US coal, including new national and local policies in China aimed at reducing air pollution and capping coal use, slowing economic growth, surging renewable energy growth, and increased public concern about air pollution.

"Many of the same factors that are causing coal to be phased out of the US market - sluggish economic growth, a rapidly developing renewable energy sector, government policies and social opposition to coal - are conspiring to make the Chinese market for US coal exports economically unviable as well," said Greenpeace East Asia Energy Analyst and report author Lifeng Fang.

The report also details earlier coal export proposals that failed in part because of unstable Asian demand, and argues that the current push to export US coal by companies like Arch Coal, Cloud Peak Energy, and Australian upstart Ambre Energy are motivated by a desperate industry, not sound economics. Among the report's findings:

The Chinese government's 12th five year plan for the coal industry caps domestic coal production and consumption at 3.9 billion tons by 2015. As China begins to decouple economic growth from coal consumption, coal is piling up in record amounts at ports and power plants.

According to the China Electricity Council, investment in the coal power sector dropped by over half from 227.1 billion RMB ($36.4 billion USD) in 2005 to 105.4 billion ($16.9 billion USD) in 2011, and this trend is continuing.

China's third largest city, Guangzhou, recently announced that it won't allow new coal power capacity within the city, and other major cities also plan to limit coal expansion in order to meet air quality standards.

Public resistance and protests against pollution are increasing, and new air pollution standards for thermal power plants from China’s Ministry of Environmental Protection will bring Chinese power plant regulations in line with developed world standards.

Renewable energy is growing rapidly in China, and the government plans to increase the share of non-fossil fuels to 30% of installed electricity generating capacity by the end of 2015.